Labor Force Statistics from the Current Population Survey

Current Employment Statistics - CES (National)

A Profile of the Working Poor, 2000

U.S. Department of Labor
Bureau of Labor Statistics
March 2002

Report 957

In 2000, 31 million people, or 11.3 percent of the population lived at or below the official poverty level1.1 million fewer than in 1999. While the bulk of these individuals were children and adults who did not participate in the labor force, about 6.4 million were classified as the working poor. This was 445,000 fewer than in 1999, continuing a 7-year downtrend. As defined for this report, the working poor are individuals who spent at least 27 weeks in the labor force (working or looking for work), but whose incomes fell below the official poverty level. Of all persons in the labor force for at least 27 weeks, 4.7 percent were classified as working poor in 2000, down 0.4 percentage point from the previous year.

Working full time substantially lowers a persons probability of being poor. Among persons in the labor force for 27 weeks or more, the poverty rate for those usually employed full time was 3.5 percent, compared with 10.2 percent for part-time workers. The majority of the working poorthree-fifths were, nevertheless, full-time workers. Only a small proportion of the working poor (4.1 percent) actively sought a job for more than 6 months in 2000 without finding any work, up from 3.5 percent in 1999. (See tables A and 1.)

This report presents data on the relationships between labor force activity and poverty in 2000 for individual workers and their families. The data were collected in the work experience and income supplement to the March 2001 Current Population Survey. For a more detailed description of the source of the data and an explanation of the concepts and definitions used in this report, see the Technical Note.

For persons living with family members, the income thresholds used to determine poverty status are in terms of family, rather than personal, income. Thus, earnings from employment are only one factor in determining the poverty status of individuals living in family settings. Also important are the earnings of others in the family, the size of the family, and other sources of income that family members might have. Personal income data are used in determining the poverty status of persons living alone or with unrelated individuals.

Demographic characteristicsAmong those who were in the labor force for 27 weeks or more in 2000, the proportion of women classified as working poor (5.5 percent) was higher than that of men (4.0 percent). Both rates continued their downward trend from 7.3 percent for women and 6.2 percent for men in 1993. (See table 2.)

Working wives were less likely than working husbands to be poor (in aggregate) because working wives were more likely to be in families with a second earner, usually a husband. (See Family structure, below.) In 2000, 1.8 percent of wives who were in the labor force 27 weeks or more were in poverty, compared with 3.0 percent of husbands. In contrast, 16.7 percent of women who maintain families and who were in the labor force for at least 27 weeks were in poverty. (See table 5.)

Younger workers were again more likely to be in poverty than were older workers. Young workers have lower earnings and are more likely to be unemployed than are older workers. Among teenagers who were in the labor force 27 weeks or more, 9.2 percent were in poverty, as were 8.7 percent of 20- to 24-year olds. These rates were roughly double the rate for workers aged 35 to 44 (4.5 percent), and more than triple the rate for workers 45 to 54 years of age (2.7 percent). (See table 2.)

Black and Hispanic workers continued to experience poverty at much higher rates than did whites. In 2000, 4.0 percent of white labor force participants were classified as working poor, compared with 8.7 percent of blacks and 10.0 percent of Hispanics. Among whites and Hispanics, rates for men and women were comparable; in contrast, the rate for black women (11.4 percent) was twice that of black men (5.6 percent). One explanation for this is that a relatively large proportion of black women maintain families on their own. Nearly 30 percent of black women maintained families in 2000, compared with only about 10 percent of white women. As noted above, women maintaining families are far more likely to be among the working poor than are married women.

Educational attainmentEducation and the likelihood of living in poverty were closely related among those in the labor force at least 27 weeks of the year. In 2000, high school dropouts were more than twice as likely as high school graduates to be counted among the working poor (12.9 percent and 5.4 percent, respectively). The incidence of being counted among the working poor declined further as educational attainment rose. Among workers with associate degrees, 2.5 percent were classified as working poor, and only 1.4 percent of college graduates were so classified. (See table 3.)

OccupationThe occupation in which one was employed continued to be related to the likelihood of being among the working poor in 2000. Almost 31 percent of the poor who worked during the year were employed in service occupations as their longest job of the year. Looked at another way, nearly 11 percent of all workers who were in the labor force for at least 27 weeks and whose longest job over the year was in services were poor, more than twice the average for all occupations. Private household workers, a subset of service workers that is made up largely of women, were the most likely to be in poverty (20 percent). Farming, forestry, and fishing was another occupation with a relatively high proportion of workers in poverty (13.7 percent). Executive, administrative, and managerial occupations and professional specialty jobs had low incidences of poverty, at 1.4 percent each. High earnings and full-time employment are typical in these occupations. (See table 4.)

Family structureAmong families with at least one member in the labor force for 27 weeks or more in 2000, 3.4 million, or 5.6 percent, had incomes at or below the poverty line, down from 6.2 percent in 1999. The poverty threshold for families is based on both the total family income and the number of family members; thus, the larger the family, the higher the level of income needed to keep the family out of poverty. This, coupled with the fact that the presence of children tends to reduce the overall labor supply of a family, contributes to the relatively high incidence of poverty among families with children. Consequently, families with at least one child under the age of 18 were much more likely to have incomes below the poverty level than were families without children (8.5 percent and 1.7 percent, respectively).

Families with more workers are less likely to be below the poverty line. In 2000, 11.4 percent of families with only one member in the labor force for 27 weeks or more were in poverty, while only 1.8 percent of families with two labor force participants, and 1.1 percent of families with three or more participants were in poverty. (See table 6.)

Unrelated individualsUnrelated individuals are those who live either alone or with nonrelatives. Of the 29.0 million unrelated individuals who were in the labor force for 27 weeks or more in 2000, about 2.2 million, or 7.6 percent, lived below the poverty level. This rate was down from 8.2 percent in 1999. Those who were living alone were less than half as likely as those who were living with nonrelatives to be poor (4.8 percent and 10.6 percent, respectively). Unrelated individuals with low incomes often live with others in order to share expenses and pool resources. Because their poverty status is determined by personal rather than household income, the actual economic hardship of these individuals may be overstated by the poverty measure. Conversely, many of those who live alone do so because they have sufficient incomes to support themselves. (See table 7.)

Labor market problemsAs noted above, people who work full timethat is, 35 or more hours a weekare far less likely to live in poverty than are others. However, there remains a sizable group of full-time workers who live below the poverty threshold. In 2000, among those who participated in the labor force for more than half the year and who usually worked in full-time wage and salary jobs, almost 3.4 million, or 3.1 percent, were classified as working poor. (See table 8.)

There are three primary labor market problems experienced by these full-time workers: Low earnings, unemployment, and involuntary part-time employment. (See definitions in the Technical Note.) About 85 percent of the working poor who usually worked full time experienced at least one of these major labor market problems. Low earnings continued to be the most common problem, with 73 percent of workers facing it, either alone or in conjunction with other labor market problems. About 30 percent of the working poor experienced unemployment, either alone or in conjunction with other problems. Only 3.6 percent experienced all three problems.

Some 514,000, or 15.3 percent, of the working poor did not experience any of the three primary labor market problems in 2000. Their poverty status may be explained by other factors, including short-term employment, some weeks of voluntary part-time work, or a family structure that increases the risk of poverty.

Stephanie Boraas, an economist in the Division of Labor Force Statistics,
Bureau of Labor Statistics, prepared this report.

Technical Note

Source of data

The primary source of data in this report is the work experience and income supplement (the Annual Demographic Survey) to the March 2001 Current Population Survey (CPS). The CPS is a monthly survey of households conducted by the U.S. Census Bureau for the Bureau of Labor Statistics to collect demographic, social, and economic information about persons 16 years of age and older. Work experience and income information collected in the March supplement refers to activity in the entire prior calendar year.

The estimates in this report are based on a sample and, consequently, may differ from figures that would have been obtained from a complete count using the same questionnaire and procedures. Sampling variability may be relatively large in cases where the numbers are small. Thus, small estimates, or small differences between estimates, should be interpreted with caution. For a detailed explanation of the March supplement to the CPS, its sampling variability, and more extensive definitions than those provided below, see Poverty in the United States: 2000Current Population Reports, series P-60, no. 214 (U.S. Census Bureau, September 2001). This publication also is available on the Census Bureau Web site (http://www.census.gov).

Information in this report will be made available to sensory impaired individuals upon request. Voice phone: (202) 691-5200; Federal Relay Service: 1-800-877-8339. This material is in the public domain and, with appropriate credit, may be reproduced without permission.

Poverty classification. Poverty statistics presented in this report are based on definitions developed by the Social Security Administration in 1964 and revised by Federal interagency committees in 1969 and 1981. These definitions originally were based on the Department of Agricultures Economy Food Plan and reflected the different consumption requirements of families, based on factors such as family size and the number of children under 18 years of age.

The actual poverty thresholds vary in accordance with the makeup of the family. In 2000, the average poverty threshold for a family of four was $17,603; for a family of nine or more persons, the threshold was $35,060; and for an unrelated individual aged 65 or older, it was $8,259. Poverty thresholds are updated each year to reflect changes in the Consumer Price Index for All Urban Consumers (CPI-U). The thresholds do not vary geographically. For more information, see Poverty in the United States: 2000, cited above.

Low earnings. The low earnings level, as first developed in 1987, represented the average of the real value of the minimum wage between 1967 and 1987 for a 40-hour workweek. The base year of 1967 was chosen because that was the first year in which minimum-wage legislation covered essentially the same broad group of workers who currently are covered. The low earnings level has subsequently been adjusted each year using the CPI-U, so that the measure maintains the same real value that it held in 1987. In 2000, the low earnings threshold was $253.45 per week. For a more complete definition, see Bruce W. Klein and Philip L. Rones, "A profile of the working poor," Monthly Labor Review, October 1989, pp. 3-13.

Income. Data on income are limited to money income received in the calendar year preceding the March survey date, before personal income taxes and payroll deductions. They do not include the value of noncash benefits such as Food Stamps, Medicare, Medicaid, public housing, and employer-provided benefits. For a complete definition of the income concept, see Poverty in the United States: 2000, cited above.

In the labor force. Persons in the labor force are those who worked or looked for work sometime during the calendar year preceding the March survey date. The number of weeks in the labor force is accumulated over the entire year. The focus in this report is on persons in the labor force for 27 weeks or more.

Involuntary part-time workers. These are persons who, in at least 1 week of the year, worked fewer than 35 hours because of slack work or business conditions, or because they could not find full-time work. The number of weeks of involuntary part-time work is accumulated over the year.

Occupation. Refers to the occupation in which a person worked the most weeks during the calendar year.

Unemployed. Unemployed persons are those who looked for work while not employed or those who were on layoff from a job and expecting recall. The number of weeks unemployed is accumulated over the entire year.

Family. A family is defined as a group of two or more persons residing together who are related by birth, marriage, or adoption. Persons in related subfamiliesmarried couples or parent-child groups sharing the living quarters of another family memberare included as members of that family and are not distinct family units. The count of families used in this report does not include unrelated subfamilies, such as lodgers, guests, or resident employees living in a household but not related to the householder (the person in whose name the housing unit is owned or rented). Families are classified either as married-couple families or as those maintained by men or women without spouses present. Family status is determined at the time of the March interview, and thus may be different from that of the previous year.

Unrelated individuals. These are persons who are not living with any relatives. Such individuals may live alone, reside in a nonrelated family household, or live in group quarters with other unrelated individuals.

Related children. Data on related children refer to own children (including sons, daughters, and step- or adopted children) of the husband, wife, or person maintaining the family and all other children related to the householder by birth, marriage, or adoption.

Race. White, black, and other are terms used to describe the race of workers. Included in the other group are American Indians, Alaskan Natives, and Asians and Pacific Islanders. Because of the relatively small sample size, data for this group are not separately tabulated or published.

Hispanic origin. This term refers to persons who identify themselves in the CPS enumeration process as Mexican, Puerto Rican, Cuban, Central or South American, or of some other Hispanic origin or descent. Persons of Hispanic origin may be of any race; thus, they also are included in both the white and black population groups.